Mortgage Matters

Joe Tomkins

July 2008

When is a Condo not a Condo?

If you’re looking for a home you may have your eye on a particular condominium building in or around Nanaimo. You should be aware, though, those different buildings may have very different ownership arrangements.  Here is a rundown of the three major types of apartment and town-home ownership interests: 

Freehold Units

The overwhelming majority of condos are freehold strata units, where typically you have fee simple ownership of your unit.  The land as well as common areas such as underground parking, recreation facilities, and hallways are owned collectively by all the owners.  With most freehold condos, you pay monthly strata fees for upkeep of the building’s exterior.  With this type of ownership interest, make sure you know exactly what you are buying: in some cases you own your parking space, storage facilities, or perhaps your backyard if the unit is a town-home. Be sure to consider the escalating costs with strata fees; it can significantly affect what you qualify for.

Leasehold Units

With a leasehold unit, you do not have fee simple ownership, but rather a lease from a landlord for the right to use the unit for a specific number of years.  Many leasehold arrangements are created with a period of 99 years, but no matter what the length of the original term, you may only purchase your unit for the portion of the lease that remains.  Needless to say, the fewer years left on the term of the lease, the fewer buyers there will be willing to pay for the leasehold interest. 

Landowners who lease their land are often municipal governments, First Nations groups, or private investors who normally lease to a developer who in turn arranges leases with individual users.     

Co-op Units

Not to be confused with rental housing, with this arrangement you purchase shares in a co-operative association which owns the land and building including individual units and common areas, and you have a leasehold interest in your unit.  You usually pay monthly dues to the co-op board to cover the building’s taxes, maintenance and other common expenses.  Co-ops can impose strict guidelines for new buyers such as minimum income or a background check – a factor when you buy into the co-op or if you are selling your unit. 

For more information on the advantages and disadvantages of these different types of ownership and financing strategies for each, consult your Mortgage Consultant for professional advice.

Joe Tomkins

Mortgage Consultant

INVIS Mortgages in Nanaimo

Office:               250 754 7775       

Email: joetomkins@invis.ca